CANNON'S HISTORY

Our founder, Del Cannon, graduated from the University of Kentucky with a B.S. in Industrial Management/Engineering. He was then employed by Union Carbide Corporation as an Industrial Engineer to improve material flow in maintenance activity for a large chemical manufacturing plant in Charleston, W. Virginia.

After serving as an Officer and Flight Instructor in the U.S. Air Force, he was employed as an Industrial Engineer by Collins Radio Company; an aerospace electronics firm that designed and manufactured military and commercial communications systems. Collins is widely recognized for its premier avionics products and had sales of $8 B (in todays dollars) at the end of Del's eight years with the company.

He served in management positions in Industrial Engineering, Production Control, Materials Management, and two Division Director assignments, the last on the third level of the company organization chart. One of his special assignments was to represent the company with Douglas Aircraft and the Air Force in implementing AF 375-1; a Configuration Control Accounting and Reporting Specification on the Manned Orbital Lab (MOL). Subsequently this Spec became the standard for the Department of Defense (DOD). The focus of the Specification is on the procedures and techniques necessary to control the design and manufacture of products; and, to report the products' content and the processes used to manufacture.

In 1968, Mr. Cannon started Cannon Computer Company through contracts with:

• Scientific Control Corporation, a computer system manufacturer
• Cooper Airmotive, Inc., an aircraft engine overhaul and repair facility
• Vought Aeronautics, an aircraft manufacturer
• Chilton Corporation, a regional financial reporting firm.

These contracts were to program and implement the previously designed Cannon Manufacturing / Material Control System (MCS); program a Department of Defense Financial Accounting System; and, facilities management of an IBM mainframe data center.

From the beginning Cannon's business plan has been for clients to process the MCS on Cannon's host data center. Our Clients pay a monthly rental fee for the proprietary, copyrighted MCS and time sharing of Cannon's labor and computer/communications equipment. Clients do not experience large front-end cash outlays for software and hardware and, have the ongoing benefits of Cannon's manufacturing and material control expertise. The average tenure of our clients has been fourteen years with the longest lasting over three decades and continuing.

From his manufacturing experience Mr. Cannon developed the theory that material CONTROL in a manufacturing company can be used to shorten manufacturing cycle times, increase direct labor efficiency, and reduce inventory investment. The theory has been proven in 233 geographic installations as in the following selected top performers:

Mr. Henry McGee, CEO of Cooper Airmotive, a Division of Cooper Industries, said in a meeting of the Airline Industry Executives Association, "The lifeblood of my company is inventory CONTROL and the heart or pump is the Cannon Material Control System. In two years MCS helped us add 10 percentage points to Gross Profit Margin".

Mr. David Monnich, CEO of TRW Optron Inc. said, "The MCS enabled us to increase Gross Profit Margin by 22 percentage points in nineteen months. It is the most powerful profit improvement tool ever created."

Mr. Arlon Svien, CEO of Forney Engineering Company reported to his parent company (Foster Wheeler Corporation) that in three years after contracting for the Cannon MCS he had increased Gross Profit Margin by 28 percentage points. He further added "I have the best Manufacturing system in the world."

Honeywell Communications Network Division (HCND) increased Gross Profit Margin by 16 percentage points after installing the Cannon MCS. HCND won the Honeywell BEST MANUFACTURING FACILITY award every year that the company was owned by Honeywell. Mr. Ross Gwinner, President of the company and former Manager in IBM's Programming Systems Group, stated that "The MCS is the working model of the vision we had at IBM when we programmed the IBM MAPICS system. In the MCS, Cannon has a remarkable manufacturing management system and has achieved their design objectives where others have failed".

Bell Atlantic Sorbus, Inc. increased Gross Profit Margin by 11 percentage points after installing the Cannon MCS field inventory sub-system (FIS). The system is the center piece of company advertising and promotions.

These five example companies increased their Gross Profit Margins by an average of 17.4 percentage points. There were no cost cutting programs or other such efforts, it was all realized by the efficiency improvements that the MCS is designed to accomplish.

All other MCS Users increased Gross Profit Margin by 4 to 9 percentage points (average is 8). Notice we are referring to percentage points not percent increase. For example, TRW Optron increased Gross Profit Margin from 33% to 55%, or 22 percentage points.

Gross Profit Margin increases in the above examples were determined utilizing the following Income / Profit & Loss Statement reporting format:

If all other costs further down the Income Statement such as R&D, Sales and Administrative, etc. remain the same, then bottom line Pre-tax Profit will be increased by the same percentage points as the increase in Gross Profit Margin. For example, if Gross Profit Margin is improved by 5 percentage points: